A better way to invest your money in real estate is to purchase a primary residence and (with some cosmetic improvements) sell the house (after 2 years) for a tax-free gain.
You get the obvious mortgage deduction, while living there as well.
I am on my 2nd house (I bought #1 in Metro Detroit in '08) with no experience fixing up houses, so it can be done.
Have to be willing to be patient and study the market. Generally, you make your money on the "buy"
If you are in the right place at the right time, and willing to live there, that can work.....
Not everyone can handle that, though - people are unlikely in general to be able to treat their home impassionately as an investment.
The key is knowing that you've already won before you sign the papers.... as you said, doing the research, etc. Good investors always make their money on the "buy" - you buy something you KNOW is already undervalued - you never buy and then just hope.
This can be a better way to start in real estate, but it's also highly dependent on the specific market, timing, and your skills. It also doesn't scale very well.
You can make the market timing argument for any property. Like I said, I bought in Detroit area in Jan '08. Look at the numbers, the timing was awful. The purchase itself, was not.
Then try, as hard as you can, to realize that if you've been paying attention to house prices over the last decade you've been training yourself to think that this epic once-in-a-lifetime bubble is "normal" behavior for real estate prices. It isn't.
This only scales if the value of the property appreciates and allows you to refi and purchase another property with the equity. If the value goes down, the cash flow will as well.
Actually, for income real estate, it works the other way around: value is determined almost entirely on the cashflow of the property. As a result, you can control the appreciation of the property by improving the income of the property.
On that "mortgage interest deduction" thing; are you saying that the US doesn't let you deduct from your taxes the interest you pay on an investment property?
You get the obvious mortgage deduction, while living there as well.
I am on my 2nd house (I bought #1 in Metro Detroit in '08) with no experience fixing up houses, so it can be done.
Have to be willing to be patient and study the market. Generally, you make your money on the "buy"